Judgement Trap in the decision-making process

 Judgement Trap in the decision-making process 

(Emotional Management for Personal & Professional Growth Series)

 

As discussed, the thinking trap that affects decision-making quality, the last one is the "judgment trap."

What is judgement trap?

Most of us are good at predicting the outcome in routine activities like judging the distance, traveling time, some people's responses to particular queries, etc. We do it frequently and adjust our predictions based on experience and feedback.

However, business events are not easy to predict, and poor prediction will affect the quality of decision-making. For example, the commodity price next year and the sales projections for the next three months are all difficult to judge unless we do the judgements too frequently and get feedback to correct our predictions.

In those business decisions, we fall into the trap of overconfidence or underestimate or go by our past experience, which most of the time affects the quality of decision making. That is a judgment trap.

Most organizational growth challenges are not due to people's capability or resource issues. It is primarily due to underestimating the growth potential by the business leaders and not being prepared for it.

In the book "It happened in India," the author Kishore Biyani argued that we had underestimated the growth as a nation, which resulted in a lack of infrastructure. That is a judgement trap, either overestimate or underestimate.

How can we improve our judgement accuracy?
 

1. Expert suggests that instead of anchoring one figure, always go for high and low extreme projections and challenge the assumptions in each scenario, then arrive at some RANGE than sticking on to one fixed no. For example, when estimating the sales projection for next year, look for the ranges in the worst and best scenarios and improve the range instead of fixing one figure.
2. We subconsciously go by our memory or experience; it is better to share our judgment with the people who are not biased with the past. They may give better projections that can be considered.

 
Despite there being many forecasting techniques in the market, we are biased with our thinking of overestimation or underestimation or biased to memory which may affect the decision making.
 
We need to be aware of the trap when judging future projections or events.
 
Have a nice week ahead!

Problem defining trap in decision making

 Problem defining trap in decision making 

(Emotional Management for Personal & Professional Growth Series)

As we have been discussing the thinking trap and how it affects our bias in decision-making, one more thinking the trap is "Problem defining trap."
 
What is meant by a problem-defining trap?
 
In a daily situation, defining the problem or narrating the situation determines our decision-making quality. When the same problem is defined in two different ways and informed to you, you will react in two different ways, leading to right or wrong decision making.
 
For example,

You are offered a coupon by online purchase, and it says that you can redeem anytime; you may not react to redeem immediately as you decided to redeem later. In contrast, the offer is said to be redeemed within three days; you decide to redeem it immediately as you inherently do not want to take the risk of losing something.

You are reacting or making decisions based on how the statement is defined.
 
Similarly, if your customer gives orders to your organization and says that you will get more orders in the future if you deliver on time. You may be doing your best to deliver on time but not too desperate to complete on time. Alternatively, if your customer says that you will be penalized in terms of LD charges if you are not delivering on time, your reaction and decisions would be too aggressive to finish the order on time as you do not want to go through pain.
 
We are reacting to how the statement or problems are defined and presented to us.
 
The key learning is how we are defining the statements or defining the problems that eventually determine our decision-making capabilities.

In one of my client organizations, management had poorly reacted to union representatives when they asked for wage revision in absolute terms and ended up with some in-house layoffs and work stoppages. When i reframed the wage increase in terms of proportional value to future sales potential, the management realized that the union's demand was nothing to worry about as the net increase was small compared to sales.

Most of us get into the trap of looking at the problem in fixed ways and get into the thinking trap.
 
How can we overcome this defining trap?

1. When you are confronting problems, try to practice not to accept as defined by you or others; try to reframe or redefine the situation and look at whether the decision approach is changed or not. That will give you a clue that you are working on a poorly defined problem.
2. When somebody makes a decision, always examine how they framed the problem and challenge their assumption or the definition of the problem. That way, you will learn to look at the problem differently.
 
Awareness is important as we stick to the problem statement narrated to us, which may lead to the wrong decision-making approach.
 
Let us discuss another trap next week.
 
Have a great week ahead!
 

why do we make wrong decisions? (contd..)

 why do we make wrong decisions? (contd..)

(Emotional Management for Personal & Professional Growth Series)

As we have discussed some of the thinking traps that affect our decision-making ability, the next one in this thinking trap series is "looking for confirmation -evidence for our original thought."

What is meant by looking for confirmation evidence for our thought?

We biased our decision-making towards our initial thought even though there are contradictory views or data against our views. We seek people who favor our thinking and even interpret any information according to our thought.

For example,
you would like to purchase an electric vehicle and almost decided to go ahead with an electric type than IC engine. However, you are seeking information from your colleagues. Most of them are against electric vehicles at this moment, citing logical apprehensions like lack of adequate charging facilities, lack of knowledge on maintenance, service support and cost.

Since you have already fixed your mind towards the electric vehicle, you would not listen to any opinion against the electric type or look for a favorable response in line with your initial thought. That is the trap of looking only for confirming evidence for our original thought.

Sometimes we tend to interpret the information according to our initial thought.

There is an old story that goes like this.

In a classroom, a teacher wanted to give a message to the students that consuming alcohol is not good for their health. He demonstrated by taking a glass of alcohol and then putting some insects inside the glass, and eventually, insects died. He said to the students," Look, the alcohol kills the insects; hence it is not suitable for our health.One student stood and said," Sir, I have some insect trouble in my stomach, so by consuming alcohol, i can come out of the trouble, hence consuming alcohol is good for health!".

That is looking for confirmation by interpreting the message as one likes.
 
The key line, what you want to hear, you will listen to that, and even we distort the information according to our thought. That is the thinking trap.
 
In the organization setup, we always seek information or go to the people who would like to endorse our views or decision, which may affect the decision-making quality.
 
How can we overcome this thinking trap?
 

1. We need to ensure whether we give all the options equal weightage or give high weightage for our initial option as ultimate. Awareness of emotions and rationality is key.
2. We can weigh our options with many pros and cons than confining with one option; for example, In the electric vehicle purchase case, just i want to buy to be trendy and be open to other pros and cons of purchasing. That openness and flexibility will help to make the right decisions.

 
Let us discuss other thinking traps next week.
 
Have a great week ahead!

Why do we make wrong decisions? (contd..)

 Why do we make wrong decisions? (contd..)

(Emotional Management for Personal & Professional Growth Series)


 

We have discussed two thinking traps, "giving excess weightage to first information," "not to disturb the status quo," which affect our decision-making quality. The third thinking trap is "justifying past choices even though it is irrelevant."
 
Justifying the past decision even though it is not relevant now:
 
We continue to make decisions based on past choices. Even though we believe that we make rational decisions, we sometimes fall into the trap of justifying the past decision even though it is not relevant now or future. Economists term this decision-making behavior as sunk cost fallacy.
 
For example,

Assume that you have booked a ticket for a movie of your favorite star before releasing. After the film is released, you are getting more negative reviews about the movie, and your logical mind realizes that the movie is a flop.

Will you decide to go with your earlier decision of watching the film as you already booked?

If you decide to drop to watch the movie despite your advance ticket booking cost, you are not falling into the trap of sunk cost fallacy.

If you decide to go and watch since you do not want to waste your invested money, you are in the trap of sunk cost fallacy.

Similarly,

In a stock market, our tendency to average the stock, which is continuously falling. That decision is sunk cost fallacy. We hope that we recover the past investment.

Most of us get into this sunk cost fallacy in decision making, not only from a money perspective, even from the time and efforts we spent on something in the past. That is why in the organization, we use to justify some of our people's mistakes and build decisions over them repeatedly because we have invested our time and effort with them.
 
Why do we get into this thinking trap?

Internally, we do not want to admit our mistakes or accept the failures and try to cover up the old errors with new efforts or decisions. That is the nature of us.

How to overcome this thinking trap?

1. Even smart, logical decisions sometimes go wrong. Failing is not a sin, but building over the past mistake and making decisions to cover up may lead to blunders which we can avoid with awareness. We need to accept the failures as part of our decision-making process in personal and professional life.

2. Reward yourself and your team for the process of decision-making with available data then, rather than punishing for the outcome. We need to realize that we are making judgments based on some assumptions, and the outcome depends on the various factors. The ability to distinguish between the process and result will help you accept some of the failures in the decisions.
 
When we make decisions, we are driven by various emotions and need to be aware of those emotions to make better decisions. Awareness is key.
 
Let us discuss some other thinking traps next week.

Have a great week ahead!
 

Why do we make wrong decisions?

 Why do we make wrong decisions? 

(Emotional Management for Personal & Professional Growth Series)

We are discussing the thinking traps which affect our quality of decision making. Last week we discussed the thinking trap of "giving excess weightage to the first information." The second thinking trap is " Not to disturb the status quo."

 
The term "status quo" can be defined as preserving the existing practices or doing comfortable things.
 
We believe that we make decisions logically, but our mind prefers to preserve the existing practices or comfort when we make decisions.

For example,

we prefer to go to the office on a fixed route and timings;
being comfortable to deal with a few chosen vendors/customers/banks or people in the business;
having lunch or free time chatting with a few colleagues;
choosing a fixed seating location in a meeting or training session;
sticking with fixed agenda in regular meetings.

We hesitate to disturb what we feel more comfortable to us. That is the nature of our thinking process of not disturbing the status quo.
 
Why do we have the thinking of sticking on to comfort?

The source for sticking to the status quo or comfort is our internal ego or fear. When there is change, there will be some challenges; we need to take responsibility, there will be some actions that may be favorable or non-favorable, which may affect our status. That is why we prefer to stick to the existing situation as much as possible.

That is the reason when you drive some new initiatives in the organization,it would become a challenge as generally, people do not want to disturb the existing way of familiar working to new way of working.
 
 
How to overcome this thinking trap?

• As long as the status quo is not affecting our personal or our business objective, no need to change. Alternatively, if you realize the objective is not achieved due to sticking to the status quo, we need to change it. That awareness or clarity between current status vs. goal is required.
• We need not conclude that the existing status quo is the only option available. We need to be open to multiple options, which can be practiced by asking what else in every decision-making situation.
• Constantly evaluating the cost-benefit analysis in any options against the status quo will help change the perception of sticking to the status quo.

We need to be aware of thinking traps while making decisions.
  
Let us discuss some other thinking traps next week.
 
Have a great week ahead!

Why do we make wrong decisions?

 Why do we make wrong decisions? 

(Emotional Management for Personal & Professional Growth Series)

As we have been discussing "making effective decisions," research says that even though we are equipped with many decision-making processes, tools, and techniques, we are psychologically trapped in our thinking process, which affects the quality of decisions we make in our personal life and professional lives.

 
Let us discuss some of the psychological thinking traps in the coming weeks, as the awareness of the same will help us make better decisions.
 
One of the most common thinking traps is "Giving excessive weightage to first information" and taking decisions based on it.

For example,

when we meet a person for the first time, we form an internal perception based on the dressings, tone, ascend, or physique. We make decisions based on it. Later on, the reality may be pleasant or unpleasant. That is the thinking trap of giving excessive weightage to the first impression.

similarly,

When we intend to buy a product or property, we may not know its real value. When the seller initiates the price by stating X, we will decide to purchase or negotiate around the value of X only, and the probability of thinking Y is very low since we are anchored too much on the FIRST Information.

When we set the annual sales target in the organization, either the team will go by last year's performance or the past 3 / 5 years average as the mind is anchored to the first-hand information rather than looking beyond.

That is the thinking trap in decision-making.
 
How to overcome the thinking trap of giving excessive weightage to first information?
 

1. Being aware of our thinking trap when we make important decisions.
2. Doing some work beforehand and getting others' opinions so that we may not be confined with only one piece of information. ( some of us do!) for example, as in buying a product at a given X price, do research and get comprehensive data about the product to avoid the anchoring trap.
3. Going beyond the past or first information – for example, as in sales target example, rather than working from the past, set the target based on the business's market potential.

 
It is natural to get into the thinking trap, and being aware of it will help make the right decisions in personal and professional life!
 
Let us discuss some other thinking traps next week!

Have a great week ahead!

How to overcome decision dilemmas?

 In a professional environment, except for routine decisions, many of us get into the decision dilemma. The dilemma is whether we can decide in a given situation, despite sufficient data points and assumptions available. Internally fear of making wrong decisions puts us in a dilemma.

In this process, neither we make decisions nor be peaceful as non-decisiveness puts us in a disturbed state. How do we get the clarity or courage to overcome the dilemma?

For example, consider this situation.

You are head of manufacturing and received a message from your customer that they rejected the recent consignments and would impose the penalty if not replaced quickly. As this situation may typically happen, you can manage on your own. However, you have a dilemma whether you need to inform your boss or not.

Even though the problem is manageable, you have a typical decision dilemma. If you inform your boss, he may get angry with you. If you do not notify your boss, you can avoid the immediate pain of emotional drama. In case if your boss comes to know the issue at a  later stage, he would perceive it as an integrity issue, which may be much painful for you. That is a decision dilemma.

Similarly, as a manager or leader, you may have decision dilemmas in many instances like whether to recruit a person for a key role or not, whether to give feedback to a non-performer or not, whether to accept a new assignment or not. You might have come across many situations wherein you stuck to making decisions.
 
Here, we need to get clarity of our decision vs. consequence by weighing many outcomes.

The simple tool of decision vs. consequence will be helpful to overcome the dilemmas.

 

 As in the above example, if you decide to inform your boss about quality issues, you can list down all the positive and negative consequences. Also, when you decide not to inform your boss, you can list down all the positive and negative consequences. When you list down all the probable positive and negative consequences of "informing" and "not informing," you may get clarity on which path to take.

This simple tool will help to think clearly to overcome the decision dilemma.

We have a mix of emotions that puts us in a dilemma that we can overcome with rational evaluation by correlating decision vs. consequence.

You may try next time when you have a decision dilemma!
 
Have a great week ahead!